PM SHEHBAZ RECOMMENDS PETROL PRICE TO BE SLASHED BY RS15.39

PETROL PRICE PAKISTAN – Prime Minister Muhammad Shehbaz Sharif has ordered a large drop in petrol prices by Rs15.39 per litre, bringing the new price down to Rs257.7 per litre, in an effort to alleviate the public amid skyrocketing inflation. Petrol prices have now dropped for three straight weeks, after falling by Rs15.39 over the preceding two-week period. However, the Oil and Gas Regulatory Authority (OGRA) has announced a reduction in petrol prices by Rs4.74, bringing the new price to Rs268.36 per litre.

OGRA ANNOUNCES REDUCTION IN PETROL PRICES RS4.74 FOLLOWING PRIME MINISTER’S DIRECTIVE

The Finance Division’s notification also announced a reduction in the price of High-Speed Diesel (HSD) by Rs7.9, setting the new price at Rs266.18 per litre. These revised prices will be effective for the first half of June 2024.

The Oil and Gas Regulatory Authority (OGRA) has calculated the new consumer prices based on fluctuations in the international market, reflecting the government’s commitment to passing on the benefits of lower global oil prices to the consumers.

GOVERNMENT REVENUE AND TAXATION

The government has reached the maximum permissible petroleum levy of Rs60 per litre on both petrol and HSD, collecting Rs720 billion in the first nine months ending March 31. The budget target for the petroleum development levy (PDL) is set at Rs869 billion for the current fiscal year, as per commitments made with the International Monetary Fund.

Despite the general sales tax being zero on all petroleum products, the government charges approximately Rs82 per litre in taxes on petrol and HSD, which includes Rs60 per litre PDL. Additionally, Rs50 per litre is charged for high-octane blending components and 95RON petrol, along with Rs19-20 per litre in customs duty on both petrol and HSD.

IMPACT ON INFLATION

Higher prices for petroleum and electricity have been significant drivers of inflation. Petrol, primarily used in private transport, small vehicles, rickshaws, and two-wheelers, directly impacts the budget of middle and lower-middle-class households. HSD, used in heavy transport vehicles, trains, and agricultural engines, is highly inflationary as it affects the prices of vegetables and other essential goods due to its role in transportation and agricultural production.

Petrol and HSD remain major revenue generators, with monthly sales of approximately 700,000-800,000 tonnes, compared to a significantly lower demand for kerosene at just 10,000 tonnes.

PSX ANTICIPATED 

The Pakistan Stock Exchange (PSX) experienced a robust rebound on Friday after a week of declines. This resurgence was driven by a softer-than-expected inflation reading for May, which has bolstered investor expectations for an interest rate cut at the upcoming central bank meeting.

Investor sentiment improved significantly due to the anticipated lower inflation rate, which has increased the likelihood of a reduction in the central bank’s interest rate. This optimism led to broad-based gains across several sectors.

SPI

The latest data from the Pakistan Bureau of Statistics (PBS) reveals a slight increase in the Weekly Sensitive Price Indicator (SPI) for the Combined Group, which rose by 0.11% week-on-week (WoW) during the week ending May 30, 2024. Year-on-year (YoY), the SPI has surged by a significant 21.4%, underscoring the ongoing inflationary pressures in the country.

PKR

The Pakistani rupee (PKR) appreciated by 17.62 paisa against the US dollar during Friday’s interbank session, settling at PKR 278.33 per USD compared to the previous session’s closing of PKR 278.5 per USD. The currency saw an intraday high (bid) of 278.8 and a low (ask) of 278.6.

OGRA REDUCES LPG PRICES FOR JUNE

The Oil and Gas Regulatory Authority (OGRA) has announced a reduction in the price of Liquefied Petroleum Gas (LPG) by Rs3.87 per kg for June. The new consumer price for LPG is now Rs234.6 per kg, down from Rs238.46 per kg in May.

Similarly, the producer price of LPG has been decreased by the same margin, now set at Rs193.3 per kg for June. For consumers, the cost of an 11.8 kg LPG cylinder has been revised to Rs2,768.23, representing a drop of Rs45.62 from the previous price of Rs2,813.85.

New LPG Prices Breakdown:

• Consumer LPG Price: Rs234.6 per kg (previously Rs238.46 per kg)
• Producer LPG Price: Rs193.3 per kg (previously Rs197.16 per kg)
• 11.8 kg Cylinder (Consumer): Rs2,768.23 (previously Rs2,813.85)
• 11.8 kg Cylinder (Producer): Rs2,280.89 (previously Rs2,326.51)

OGRA stated that the reduction in prices is linked to a 2% decrease in the Saudi Aramco Contract Price (CP) and a 0.04% reduction in the US dollar exchange rate. This has resulted in a 1.62% decrease in the consumer price for an 11.8 kg LPG cylinder, equating to Rs45.62.

Notified LPG Producer Prices:

Notified LPG Consumer Prices:

The adjustment in LPG prices is aimed at providing relief to consumers by reflecting the changes in international LPG prices and exchange rates.